Social Mobility Hasn’t Fallen: What It Means and Doesn’t Mean

I’m fascinated by the finding, in an extensive new study, that social mobility in the United States has stayed pretty constant over the past few decades. This conclusion challenges the standard narratives presented by the left and the right, and its political implications will be much discussed. But first things first: where did it come from?

In one sense, the finding isn’t so surprising. While it has been widely assumed that social mobility is declining—in a speech last month, President Obama said as much—previous academic studies also failed to consistently identify any trend. Some showed a decline in mobility; at least one showed an increase; and most raised some tricky statistical issues. Perhaps the most influential paper, originally published in 2006, was by Chul-In Lee, of Konkuk University, in Korea, and Gary Solon, of Michigan State University. Lee and Solon examined data from the Panel Study of Income Dynamics, a long-running survey that tracks income and other characteristics of about five thousand families nationwide.

By looking, over time, at the incomes individuals earned relative to their parents’ income, they were able to measure “intergenerational mobility”—broadly speaking, the extent to which people are able to escape their upbringings. Solon and Lee concentrated on individuals born between 1952 and 1975, and their calculations covered the two decades from 1981 to 2000, when income inequality was already growing pretty rapidly. This was their conclusion:

Our estimates are still too imprecise to rule out modest trends in either direction. For the most part, though, our results for the cohorts born between 1952 and 1975 suggest that intergenerational income mobility in the United States has not changed dramatically over the past two decades.

The new study, summarized here, uses a much bigger income data set, which comes from tax records going up to 2012. The authors—Raj Chetty and Nathaniel Hendren, both of Harvard; Emmanuel Saez and Patrick Kline, both of Berkeley; and Nicholas Turner, of the Office of Tax Analysis at the U.S. Treasury—estimate two measures of intergenerational mobility. One captures how closely individuals’ position in the over-all distribution of income tracks that of their parents. The other estimates the probability that an individual will reach the top fifth of the distribution after controlling for his or her parents’ income.

The accompanying chart shows some of the authors’ findings.

Because their data is so recent, they were able to look at how members of Generation X, and even some Millennials, are doing. They tracked the incomes of individuals born between 1971 and 1986. By 2012, the youngest were twenty-six, and the oldest were forty-one. In addition, for individuals born between 1986 and 1993, the researchers used college-attendance records, which are a good predictor of future incomes, to measure their social mobility. And here is their conclusion:

We find that all of these rank-based measures of intergenerational mobility have not changed significantly over time. For example, the probability that a child reaches the top fifth of the income distribution given parents in the bottom fifth of the income distribution is 8.4 per cent for children born in 1971, compared with nine per cent for those born in 1986.

You might suppose the picture would vary across the country, with social-mobility levels declining in areas where it was already particularly low, or where income inequality has risen most. But the researchers don’t find any evidence of that, either. They write:

[I]ntergenerational mobility is fairly stable over time in each of the nine census divisions of the U.S., even though they have very different levels of mobility.

For a variety of reasons, one might want to challenge these findings. But if you do, you had better come armed with robust arguments. Chetty and Saez are established leaders in their field, and their previous work has stood up to inspection very well. “The facts themselves are pretty unassailable,” David Autor, a well-known labor economist at M.I.T., told the Times’s David Leonhardt. “How to interpret them is the question.”

That it is.

The obvious interpretation is that it is good news. Despite the enormous increase in income inequality that the work of Saez and many others has detailed, Americans in their twenties and thirties still have about as much chance of making good as their parents did a generation ago, regardless of where they come from or how rich their families were. Indeed, the study suggests that, for the most recent cohorts, social mobility may have increased slightly—at least as far as college attendance is concerned: “Children born to the highest-income families in 1984 were 74.5 percentage points more likely to attend college than those from the lowest-income families. The corresponding gap for children born in 1993 is 69.2 percentage points.”

Now for the bad news: the Horatio Alger myth is still a myth. Relative to many other advanced countries, the United States remains a highly stratified society, and most poor kids still have few prospects of making big strides. I’ve already mentioned the finding that the odds of a child moving from the bottom fifth of the income distribution to the top fifth are less than one in ten, and have been that way for decades. For children who are born in the second fifth of the income distribution, those who might be categorized as working class or lower-middle class, the probability of moving up to the top quintile has fallen significantly. For someone born in 1971, it was 17.7 per cent; for someone born in 1986, it was 13.8 per cent.

It has been known for some time that social mobility in the United States is lower than in most European countries, and that it trails some of them, such as the Scandinavian nations, by a great deal. The new study doesn’t challenge this finding, nor does it contradict the fact that other indicators of future economic success for young people—such as test scores, levels of parental involvement, and the extent of social connectedness—have exhibited a growing socioeconomic gap, leading Robert Putman and others to predict a sharp fall in social mobility. Indeed, the paper notes, “An important question for future research is why such a plunge in mobility has not occurred.”

Finally, the new study doesn’t mean that the effects of inequality aren’t more serious than they used to be. With inequality rising, particularly at the top, the rewards for clambering up the income distribution are greater, and so are the costs of getting stuck at the bottom. “The consequences of the ‘birth lottery’—the parents to whom a child is born—are larger today than in the past,” the paper notes. Or, as Saez said to the Times, “The level of opportunity is alarming, even though it’s stable over time.”

Chart from “Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility,” by Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel Saez, and Nicholas Turner (2014). NBER Working Paper No. 19844.